"All Things Edmonds" Blog

What is RESPA?
The Real Estate Settlement Procedures Act (RESPA) guides those in the residential lending world on how to disclose important facts about the costs of buying a home.  HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new "HUD-1" settlement statement. New RESPA regulations were published November 17, 2008 and are scheduled to take full effect on January 1, 2010. The "New RESPA Rule FAQs" were comprised from industry questions and are posted to facilitate implementation of these new requirements.

Rather than try and explain it all hear, I'm providing a link to HUD's website where you can read all the information for yourself.

Casey

If you're thinking about how best to time the market to get the best price on a home, here's a thought: DON'T.

The overwhelming consensus is that our interest rates of 5% or so won't - and can't - last forever. They WILL go up. Once the economy rebounds and people starting getting their jobs back, growth will increase putting pressures on inflation, which increases interest rates. 

Here's a simple 3-minute cartoon video explanation as to how increased interest rates will affect your buying power.

On Wednesday, Nov 4, the U.S. voted 98-0 to pass the expanded Homebuyer Tax Credit and yesterday, the House voted 403-12 in favor of it as well. The extended and expanded bill now goes to President Obama for his signature.  Among the bill's provisions, it will:

• extend the $8,000 first time homebuyer tax credit through April 30;
• create an additional $6,500 tax credit for current homeowners who have lived in their property for 5 consecutive years out of the past 8 (they must sell that home too);
• require proper documentation (aka proof) that they purchased a home on their federal tax filings.

For details, check out this summary of the tax credit changes on my Google Docs.

I've also posted a FAQ summarizing homebuyer tax credit changes for those who have further questions.

The United States Senate has passed the home buyer tax credit extension (and expansion) 98-0 and has sent it to the House of Representatives where House Majority Leader Steny Hoyer has said it will likely get passed and sent to President Obama for signature. 

I thought this would be a good opportunity to share a cartoon that was developed to explain how the tax credit works. The cartoon states that the credit expires at the end of November, but we'll go on the assumption that it'll actually get extended.

EDMONDS, WA -- As of today, November 4, it looks like we are seeing some real momentum with an extension and expansion of the home buyer tax credit. First, and simply, it looks like the $8,000 first-time home buyer tax credit will get extended until some time in the spring of 2010.   What's unclear right now is how much, if any, type of tax credit will be provided for current homeowners who might want to "buy up."  Several bills have been introduced in both the House and Senate and it's still unclear as to which, if any, will win out.

One thing I have seen that I do not like: there are some versions of expansion bills that require homeowners to have lived in their homes for a minimum of 5 years to qualify for the expanded (non-first time home buyer) credit. Why cut out the others? It seems wholly unfair to me to leave out those who would like to move up but aren't afforded the opportunity to get a tax break (in this economy no less!) because they have lived in their homes for "only" 4 or 3 or 2 years. Even the homestead law allows them to take tax free capital gains on their homes if they've lived in them for just 3 of the past 5 years.

Rather than add to the confusion, you can read for yourself the myriad of news reports on the various bills and where they stand. Keep in mind what they say about laws and sausages: two things you never really want to see made.

News link updates on the home buyer tax credit:

• UPI story reporting expansion to home buyers through June 2010
• Washington Post article on $6,500 credit for existing homeowners (5+ years only)
• CNBC article questioning the tax extension
• Politico.com story on Senate Banking Chair Dodd in support of extension/expansion
• Seattle P-I report on the extension/expansion
• WSJ Q&A on the extension and expansion of the tax credit
• Bloomberg article that quotes many lawmakers

Happy reading!

Casey